Deputy leader defends council's borrowing to deliver front line services

WARRINGTON Borough Council’s Deputy Leader Cllr Cathy Mitchell has defended the council’s borrowing which she says delivers £20m to help deliver front line services as one of the “most poorly funded” authorities in the country.

She also says the council has been “short-changed” to the tune of £10m by the Government in the fight against the COVID-19 pandemic.
With council tax rises of 4.98 percent looming Cllr Mitchell says she has spoken out following personal attacks, saying it is easy to criticise without solutions.
“If a politician disagrees with investing to create income it’s really important that they tell the public what they would do positively,” she said.
Last December Warrington South Tory MP Andy Carter called for an urgent inquiry into the Council’s £1.6b “risky” investments in capital projects which he described as excessive council borrowing. Local government secretary Robert Jenrick has also said he will investigate council’s he believes are borrowing excessively.
Explaining the council’s borrowing policy Cllr Mitchell Deputy Leader and Cabinet Member for Finance said: “We are now a year into the COVID 19 pandemic and the impact of the disease on families, communities and businesses locally cannot be underestimated. We must continue to pull together through this as a town and we are well placed to make a good economic recovery, once it is safe to do so.
“As a Council, our staff have worked tirelessly all through this crisis, emptying the bins, handing out food and support to people who need it, caring for people who need extra help, supporting our colleagues in care homes and schools, looking after children in need and handing over government support for businesses. The Government asked up to step up and play our part, which we did. They told us not to worry about funding it – they would reimburse us “whatever it takes”. We’ve received payment of some of our costs – but not all. At the moment we have been short-changed by about £10m. Since we’ve already been underfunded for the last decade – councils have lost 60p in the £1 since 2010 – we really couldn’t afford to take on the costs of dealing with COVID without the support that the Government promised us. So far they haven’t come good on that promise.
“Recently the Government announced some desperately needed funding for adult social care – and then said that most of it would have to come from increasing council tax, passing on the cost of adult social care to hard-pressed families. The PM promised to sort out the funding of adult social care when he was elected. We still wait for his solution.
“Warrington is one of the most poorly funded councils in the country. When the Conservatives started to cut council budgets they told us to be more commercial and enterprising. For us as a Labour council, the choice was stark – we could simply pass on Conservative cuts to residents, cut services to the bone. We realised that the people most severely affected by that would be those who rely most on us – the elderly, the sick, children at risk of harm and our most vulnerable people. The alternative was to find a way of raising income. This is what we’ve done and it raises over £20m out of a total annual revenue budget of £140m – it’s a big chunk of our income. The £20m is the money we have leftover when we’ve paid the running costs and interest on borrowing and any other costs. Much is made of risk – there is also risk attached to cutting services to vulnerable people. The money raised from our investments contributes to a reserve so money is put to one side in case of any problems.
“We choose our investments wisely. Most of our investments are in bricks and mortar, so we have an asset we can sell if we choose to do so. We could sell our assets and repay the council’s debt – but would then not receive the income that they produce. By law you can’t use money from the sale of assets to pay for the day-to-day costs of running services, but you can use the income you get from renting them out. Our rental agreements are long term with tenants who are carefully vetted.
“We always use both our own and external experts to advise us whenever we consider an investment and don’t look for the highest returns as they tend to be riskier investments. We keep all of our investments under constant review. COVID has been a very good test of our investments. So how have they done?
“The value of our commercial properties has increased since the pandemic hit. In the last quarter of 2020 we collected 99% of rent on demand. Advisers reported that the performance of our property investment portfolio has been robust and described rent collection as “exceptionally high”. We have focussed a lot of our investment on logistics and food, sectors which have done well. We have not invested in riskier areas, such as shopping centres.
“We have a 50% stake in Together Energy which, as well as providing an income to pay for services, also employs people locally and is now supplying 100% green energy. The company will also help us to tackle fuel poverty. The company has continued to grow throughout the pandemic and produced good financial returns.
“Our investment in Redwood Bank has created jobs locally and has loaned money to small and medium-sized businesses in Warrington and throughout the North West. It consistently performs to the business plan upon which we made the original investment.
“Some say councils shouldn’t be investing and adopting a commercial approach. I agree. Councils should be funded properly by Government and shouldn’t have to. Councils are regularly given extra responsibilities by Government, but not given enough money to fund them. This isn’t about properly funding councils, it’s about funding communities – it’s time for the Government to put the money into Warrington – not just for shiny, big-ticket projects – but for the services people value and rely on day to day – you know, levelling up…
The Borough Council’s cabinet backed a 4.98% council tax increase last night, Monday, with Cllr Mitchell saying the council had no ‘alternative.’
The budget and council tax proposed increase will come before full council for a vote on March 1.